Sainsbury’s to merge with Asda to create largest supermarket chain in UK

Retail acquisition news : British retail giant Sainsbury’s has agreed to acquire rival UK supermarket chain Asda from Walmart in exchange of £2.975 billion in cash and a stake of 42% in the combined business.

The merger deal, which is aimed to create the largest supermarket chain in the UK, values Asda at nearly £7.3 billion. The Sainsbury’s Asda merger will result in combined revenues of £51 billion for 2017.

Post-merger, the enlarged business will boast of a complementary network of over 2,800 Sainsbury’s, Asda and Argos stores and a number of UK retail websites. The combination is expected to create wider choice for customers with increased store formats and channels on offer, with the enlarged business to have 47 million customer transactions a week.

Commenting on Sainsbury’s Asda merger, Mike Coupe – CEO of Sainsbury’s, said: “This is a transformational opportunity to create a new force in UK retail, which will be more competitive and give customers more of what they want now and in the future. It will create a business that is more dynamic, more adaptable, more resilient and an even bigger contributor to the UK economy.

“Having worked at Asda before Sainsbury’s, I understand the culture and the businesses well and believe they are the best possible fit. This creates a great deal for customers, colleagues, suppliers and shareholders and I am excited about the opportunities ahead and what we can achieve together.”

Sainsbury’s to acquire Asda from Walmart in cash-cun-stock deal. Photo courtesy of Sainsbury’s.

US retail giant Walmart has agreed to be a long-term shareholder and partner in the enlarged business. It will leverage its global scale and investment to help the Sainsbury’s Asda merger.

Judith McKenna – President and CEO of Walmart International on the Sainsbury’s Asda merger, said: “This proposed merger represents a unique and bold opportunity, consistent with our strategy of looking for new ways to drive international growth. Asda became part of Walmart nearly 20 years ago, and it is a great business and an important part of our portfolio, acting as a source of best practices, new ideas and talent for Walmart businesses around the world.

“We believe this combination will create a dynamic new retail player better positioned for even more success in a fast-changing and competitive UK market. It will unlock value for both customers and shareholders, but, at the same time, it’s the colleagues at Asda who make the difference, and this merger will provide them with broader opportunities within the retail group. We are very much looking forward to working closely with Sainsbury’s to deliver the benefits of the combined business.”

The enlarged business will operate as dual brands with Asda to continue to be operated from Leeds by its own CEO, Roger Burnley. The Asda CEO would join the Group Operating Board of the Combined Business so that Asda keeps up its heritage and roots.

Roger Burnley – CEO of Asda, said: “The combination of Asda and Sainsbury’s into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice.

“Asda will continue to be Asda, but by coming together with Sainsbury’s, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive.

“From my six years with Asda and ten years with Sainsbury’s, I know first hand that both organisations are fortunate to employ some of the most talented and customer-focused colleagues in this market and I am excited by the opportunity of the two coming together.”

Closing of the Sainsbury’s Asda merger would be subject to various regulatory approvals that could go up to the second half of 2019.